Making changes to employee contracts

Another step some employers may be considering is to cut certain discretionary payments or bonuses. However this could cause contractual issues.

Employers should always consult with employees before making any changes to contracts of employment and ensure any changes are agreed to by the employee.

If contracts contain flexibility clauses, this will not immediately mean that major changes can be made. Flexibility clauses will only affect minor and reasonable changes which are not detrimental to the employee.

Changes such as the reduction or removal of bonuses could still result in unlawful deduction from wages claims and constructive dismissal claims.

Age discrimination in future recruitment

The introduction of the national living wage could also lead to employment law risks in future recruitment.

Employers looking to hire people aged under 25 in order to avoid paying the national living wage could face indirect discrimination claims.

For instance, if two potential employees are rated the same at interview the employers should not take age into consideration.

Favouring potential employees aged under 25 during the recruitment process due to a wish to save money could amount to direct age discrimination.

Penalties for a failure to comply with the national living wage

Employers who deliberately fail to pay qualifying staff will face a fine of 200% of arrears owed up to £20,000 per unpaid employee. This will be halved if it is paid within 14 days.

Those who fail to comply with the national living wage could also face criminal charges. If found guilty, they could be disqualified from being a company director for 15 years.

Avoid employment law risks with expert advice from LawforEmployers

To ensure you avoid the employment law risks caused by the introduction of the national living wage, contact the specialist employment solicitors at LawforEmployers today.